corporation to get the dealdone. Since “there is no util-ity on the back end to provideall of this wonderful cred-it support,” said John, devel-opers need to ask themselves,“what can I live with for thisoff-taker, what will tax equi-ty live with? How do I struc-ture something that is goodenough for them?”Another issue that needsto be worked out contractu-ally is what happens whenthe renewable energy genera-tor is curtailed and producesno power. Curtailments occurwhen there is too much powerbeing produced for the grid toaccept — at these times theelectricity spot price goes neg-ative and wind turbines aregenerally shut down. Johnexplained that corporationsmight ask “why would I everhave to pay dollars or ‘trueup’ fnancial differences whenthere is no product?”When these situationsoccur, explained John, itdoesn’t mean that the cor-poration has stopped usingpower, just that the powerit is using is generally verycheap. So contractually itis really about fguring outhow to structure the deal,

said John: “So I [the corpora-tion] got really cheap powerbecause there was too muchon the grid so I need to give alittle back to the developer tokeep the economics ok,” he explained.

Along those same lines, one of the newer pain points for developers is settling the basis between two different spot markets. In
certain situations, a generator is feeding into the grid at one interconnection point but the off-taker is using power from a different connection point. For developers, the problem is this: “If I put
energy on the grid here at this connection point but I am settling
here, how do I manage this basis between the two because there
can be natural swings,” said John, adding that this is “a big issue.”

Why Not RECs?

Legally from the perspective of a utility, because renewable energy certifcates (RECs) represent the attributes of renewable energy, corporations could simply purchase RECs and be able to
claim that their operations are powered by clean energy. While
that was happening in the earlier days of renewables, the rise of
corporate PPAs again points to an evolving industry.

First, said John, with a PPA a corporation can “point to a wind
farm and say ‘that’s my wind farm, all my energy comes from
there,’” but he thinks corporate PPAs are actually more about
the price of renewable energy. The sustainability offcer in a corporation might be satisfed with RECs but “the CFO steps in and
looks at the economics,” he said.

John said that the CFO views the deal differently, thinking “IfI do a 10-year, 15-year, 20-year deal, then what does my 20-yearhorizon look like for power prices?” With that in mind, the cor-porate renewable PPA becomes a way to “hedge against thefuture to make sure I can lock in the power prices,” he said. “Youcan’t do that with just RECs.”Up to now, corporate PPAs have mostly been done with windprojects in markets where there is a lot of liquidity and pricetransparency, said John, like the ERCOT market in Texas. “Butthere is no reason that I can think of that you couldn’t do it withsolar,” he said, adding that the C&I deals that are being donetoday are very different from those that were done in 2013.

“I learn something on literally every PPA,” said John.

In 2015 corporate buyers contracted for almost 3. 5 gigawatts
of new renewable energy PPA capacity, according reports, and
that number is expected to grow again in 2016. Keep your eye
on the corporate renewable energy procurement and if you are a
developer looking for an offtaker, you might try calling up CFOs
of large corporations and see if they want in on the deal. à